Wales boss Rob Page admitted his players let themselves down after defeat left them staring at World Cup elimination.
Goalkeeper Wayne Hennessey was shown a straight red in the 86th minute for a dangerously high tackle, with Iran scoring twice in added time to seal victory.
Defeat for Rob Page’s side means they must beat England on Tuesday to have any chance of making the last 16 on their first World Cup appearance for 64 years. Wales boss Page said: “They deserved the win. Before I made the changes, they hit the post, the bar, they had a goal disallowed in the first-half.
“I’m not going to sit here and say we deserved anything out of that game. We weren’t in the game at all. We can carry one or two players if they have an off day, but when the whole team aren’t at it, there's only going to be one outcome.
“We fell well below the standards we've set in recent months and when you do that in top competitions, you get punished. We’ve got to get on with it. We can’t sit around crying about it.
“We have an opportunity to put it right. We want to give our supporters something to cheer about. They have shown massive commitment to come over here and it’s really disappointing to have given them that performance today.”
Wales skipper Gareth Bale said: “We’re gutted, there’s no other way to say it. We fought until the last second and we need to go again. “We are all gutted but we have to pick ourselves up straight away. It’s going to be difficult for us for sure. We’ll have to see. What can I say? We recover and we have to go again.”
Hennessey was initially shown a yellow card for his reckless challenge, but that was upgraded to a red after a VAR review. Substitute keeper Danny Ward came on but conceded twice, to leave Wales on the brink of going out.
Jubilant Iran coach Carlos Queiroz said: “This is just the beginning, but we need to finish the job. It was a wonderful day for us. I don’t have words to say thank you to the players. They were brilliant, they deserve all the respect.
“We showed the football we have inside our souls and in our minds. Everything is open in the group ahead of the last round, but what is important is that we have our goals and dreams in our hands.”